Fuzzy Monkey Technologies, Incorporated purchased as a long - term investment $100 million of 8%...
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Accounting
Fuzzy Monkey Technologies, Incorporated purchased as a long - term investment $100 million of 8% bonds, dated January 1, On January 2024. Managements has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity the market yield was 10%. THe price paid for the bonds was $82 million. Interest is received semiannually on June 30 and Dec. 31. Due to changing market conditions, the fair value of the bonds at Dec. 31, 2024 was $90 millions.
Require:
1- to 3 prepare the relevant journal entries on the respective dates (record the interest at the effective rate)
4- At what amount will Fuzzy Monkey report its investment in the Dec. 31, 2024 balance sheet?
5- How would Fuzzy Monkey 's 2024 statement of cash flows be affected by this investment? (If more than one approach is possible, indicate the one that is most likely)
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